General Motors and Tesla are among the bigger players in the automotive sector. Tesla is the first mover in the EV space.
On the other hand, GM is a latecomer but the company is established in the fossil-fueled vehicle segment. GM has existed for over a century while Tesla has only operated for a decade.
Moreover, GM has committed to going all-electric and will spend billions on EV development in the next several years. Tesla looks more promising, but it is still early to tell who will lead the EV race.
That said, this article explores Tesla and GM in several aspects, including revenue, margins, and profitability.
Let’s get started!
Readers interested in the R&D spending of both companies may find more resources on this page: GM Vs Tesla in research and development
Please use the table of contents to navigate this page.
Table Of Contents
Definitions And Overview
Revenue
A1. Revenue Per Car
Profit
B1. Profit Per Car
Margin
C1. Vehicle Margin
Consolidated Margin
D1. Operating Margin
Conclusion And Reference
S1. Conclusion
S2. References and Credits
S3. Disclosure
Definitions
To help readers understand the content better, the following terms and glossaries have been provided.
Revenue Per Car: Revenue Per Car is defined as automotive revenue excluding leasing, regulatory credits, non-automotive segments, etc., divided by vehicle sales.
Revenue Per Car = Automotive Revenue / Vehicle Sales
Vehicle sales represent vehicle wholesale in the case of General Motors and vehicle retail volume excluding leasing in the case of Tesla.
Profit Per Car: Profit Per Car is defined as automotive gross profit divided by vehicle sales
Profit Per Car = Automotive Gross Profit / Vehicle Sales
Vehicle sales represent vehicle wholesale in the case of General Motors and vehicle retail volume excluding leasing in the case of Tesla.
Vehicle Margin: Vehicle margin is defined as the ratio of automotive gross profit to automotive revenue.
Vehicle Margin = Automotive Gross Profit / Automotive Revenue
Automotive revenue represents car sales revenue excluding GM Financial in the case of General Motors and leasing, regulatory credits, and energy in the case of Tesla.
Operating Margin: Operating margin is a financial metric that measures a company’s efficiency in generating profit from its operations.
It is expressed as a percentage and is calculated by dividing operating income (also known as operating profit) by net sales (revenue).
Operating Margin = Operating Income / Total Net Revenue
Essentially, operating margin shows what percentage of revenue is left over after paying for variable costs of production, such as wages and raw materials.
It’s a key indicator of a company’s financial health and its ability to manage its operations effectively. The higher the operating margin, the more profitable the company is considered to be.
Revenue Per Car
The definition of revenue per car is available here: revenue per car.
Tesla generates much higher revenue per vehicle compared to General Motors, as shown in the chart above.
For example, Tesla’s revenue per vehicle was $45,200 in fiscal year 2023, while GM earned just $41,800 in revenue per car in the same period.
On average, GM’s revenue per vehicle came in at $40,600 between fiscal year 2021 and 2023, while Tesla’s figure was $49,600 during the same period.
While Tesla earns higher revenue per car, the figures have been coming down, as shown in the chart above. Tesla used to make nearly $80,000 in revenue per car. This figure has reduced by nearly 50% since 2017.
As of 2023, the gap of revenue per vehicle between GM and Tesla significantly narrowed.
Profit Per Car
The definition of profit per car is available here: profit per car. Profit per car for both companies is evaluated based on the automotive gross profit.
Similarly, Tesla generates much higher profit per vehicle compared to General Motors, as shown in the chart above.
On average, Tesla earned roughly $11,700 in profit per car between fiscal year 2021 and 2023 versus GM’s $4,600 in profit per vehicle.
However, Tesla’s profit per vehicle also has significantly declined in recent years, topping just $7,700 as of 2023. At this figure, Tesla still makes 80% more profit than GM’s $4,300 in profit per vehicle but the gap is narrowing.
Vehicle Margin
The definition of vehicle margin is available here: vehicle margin. Vehicle margin for both companies is evaluated based on the automotive gross profit margin.
Tesla has much better vehicle margins than GM, as depicted in the chart above.
On average, Tesla’s vehicle margin topped 23% between fiscal year 2021 and 2023, while GM’s figure reached 11% in the same period.
As a result, Tesla’s vehicle margin was more than twice the result of General Motors, which illustrates that Tesla was more than twice as profitable as General Motors.
In fiscal year 2023, Tesla’s vehicle margin tumbled to 17% from 26% in 2022 while GM’s figure stayed relatively firm at 10%. Although Tesla’s vehicle margin significantly decreased in 2023, it was still way higher than GM’s vehicle margin of 10%.
Operating Margin
The definition of operating margin is available here: operating margin.
From the perspective of operation, Tesla has operated more efficiently than GM does, as reflected by the operating margin in the chart above.
On average, Tesla’s operating margin measured nearly 13% between 2021 and 2023 versus GM’s operating margin of 6%.
Although Tesla has better operating margin than GM does, its results have changed by a large degree over the last several years. For example, Tesla’s operating margin was 17% in 2022 but it tumbled to 9% as of 2023, a decrease of nearly 50%.
On the other hand, GM’s operating margin has remained relatively firm at 6%.
The wild swing in Tesla’s operating margin has been a result of the company’s drastic measures to cut prices and give discount for its vehicles. Morever, Tesla also has increased spending on AI and Robotics, as reflected by its growing R&D spending.
Summary
To recap, Tesla is more profitable than General Motors. For example, Tesla generates much better vehicle margin and profit per car compared to General Motors.
Also, Tesla operates much more efficiently than General Motors, as seen in the higher operating margin.
References and Credits
1. All financial figures presented in this article are obtained and referenced from financial statements, SEC filings, earnings reports, etc., which are available in: GM SEC filings and Tesla SEC filings.
2. Pexels Images.
Disclosure
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